Why Eli Lilly Stock Just Popped
Key Points
Eli Lilly beat on both top and bottom lines this morning.
The company's GLP-1 business is doing fine despite pricing pressure.
Now, Lilly is focusing on building up its cancer treatment business.
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Eli Lilly (NYSE: LLY) stock jumped 8.7% through 10:20 a.m. ET Thursday after crushing on earnings and raising guidance this morning.
Heading into the Q1 earnings report, analysts expected Lilly to earn $6.97 per share on quarterly sales of $17.6 billion. In fact, Lilly earned $8.55 per share, non-GAAP, on $19.8 billion in sales.
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Eli Lilly Q1 earnings
Powered by GLP-1 diet drugs, Lilly's Q1 revenue surged 56% year over year -- and profits grew three times as fast, up 170% year over year. (Earnings calculated under generally accepted accounting principles (GAAP) were lower than the non-GAAP number shown above, but still impressive at $8.26 per share.)
Lilly noted its drug shipments increased by 65% by volume. Revenue growth was a bit slower due to a 13% decline in prices amid growing competition in the GLP-1 space.
What's next for Lilly?
Now here's the thing that may actually surprise you about this report: While it's widely understood that Lilly depends heavily on its GLP-1 business for both sales and profits today, the momentum is shifting. As Reuters recently put it, Lilly is working to "diversify beyond obesity," and sales are actually growing even faster in the company's immunology, oncology, and neuroscience divisions, where growth was 160% in the quarter.
This is both a consequence of -- and also a reason why -- Lilly has been buying up gene therapy companies the past few months.
Change won't happen immediately, of course, and Eli Lilly remains very much a GLP-1 stock. In addition to the cancer initiatives, the company noted progress getting its Foundayo (orforglipron) GLP-1 pill approved by the FDA in the quarter. Both parts of the business are still growing.
It's just that, right this moment, the cancer part of the business is growing faster.
Should you buy stock in Eli Lilly right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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